With the Exception of Mainframes and Cloud, IBM Suffers Tough Quarter

IBM said it had a tough third-quarter, with net income of $3.0 billion, down from $3.5 billion during the same period a year ago, a decrease of 14%. Total revenues for the third quarter were $19.3 billion, down 14% from the third quarter of 2014.

Not all was gloom, however, for Big Blue.Revenues from z Systems mainframe server products increased 15% compared with the year-ago period. Total delivery of z Systems computing power, as measured in MIPS (millions of instructions per second) increased 18%.

"We are continuing to make significant investments to build platforms around analytics, cloud, mobility and security that lay the foundation for a new era of cognitive business - where we see long-term value for our clients and shareholders,” said Ginni Rometty, IBM chairman, president and CEO.

Revenues from the company’s strategic imperatives - cloud, analytics, and engagement - increased 17% year-to-year; increased 20% year-to-date. Total cloud revenues (public, private and hybrid) increased more than 45%, and are $9.4 billion over trailing 12 months. The annual run rate for cloud delivered as a service - a subset of the total cloud revenue - increased to $4.5 billion from $3.1 billion in the third quarter of 2014.

Revenues from business analytics increased 9% year-to-date. Revenues, year-to-date, from mobile more than quadrupled, from security increased 6%, and from social increased 32%.

Revenues from the software segment were down 10% to $5.1 billion compared with the third quarter of 2014. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $3.4 billion, down 7% year-to-year. Operating systems revenues of $0.4 billion were down 14% year-to-year.

Revenues from the Systems Hardware segment totaled $1.5 billion for the quarter, down 39% year-to-year. Revenues from Power Systems were down 3% compared with the 2014 period. Revenues from System Storage decreased 19%.

Global Technology Services segment revenues were down 10% to $7.9 billion. Global Business Services segment revenues were down 13% to $4.2 billion. The estimated services backlog as of September 30 was $118 billion, up 1% year-to-year.